The paper found a negative relationship between fiscal consolidation and growth forecast errors and concluded that fiscal multipliers during the crisis must have been larger than had been assumed. In other words, austerity has had more negative effects than the IMF had previously assumed.

Olli isn't happy that this research has been released. His letter says that this debate

has not been helpful and has risked to erode the confidence that we have painstakingly built up over the past years in numerous late-night meetings.

Even leaving aside the medieval prince aspects of these comments ("Galileo needs to stop undermining confidence in the Ptolemaic system") can Olli really believe that Europe's finance ministers have been building up confidence while the economy languishes in recession?

The same bullshit is implicit in Juncker's comments.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

Note that Juncker is not blaming the member states for giving up the Community Method (something he talked about as Eurogroup president when he was still the PM and FinMin of a small member state, mind you). He's pulling out the Anglo-Saxon bogeyman to cover for the failure of the European Union supranational policy apparatus (Commission, ESM, ECB...)

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

Governments which are the problem, and not the EU, is a lot like saying it is the two spouses which are the problem, and not the marriage. One can well be technically correct, and yet be completely beside the point.

The Hun is always either at your throat or at your feet.
Winston Churchill

selling. Focus on the positive aspects of what you are selling, this is strength. Focus on the negatives of the competition is a sign of weakness, and lack of belief in selling your own product on the merits.

And like I said, good luck with that.

The Hun is always either at your throat or at your feet.
Winston Churchill

Focus on the positive aspects of what you are selling, this is strength. Focus on the negatives of the competition is a sign of weakness, and lack of belief in selling your own product on the merits.

The author of this piece we are discussing does not seem to agree with you, as it is entirely a focus on the weakness of the neoliberal power bloc within the EU, with not a smidgeon of focus on the positive aspects of the dismantling of the EU that the author is selling.

Yes, but why is satire the only exception to the rule that all discussion is an effort to sell a position and all efforts to sell a position can be tossed aside if they are negative criticism of opposing arguments instead of positive proclamation of benefits of the position being argued for?

If satire is not the sole and unique exception, then when the above dichotomy is presented, "positive claims valid, objections invalid", the list of exceptions may then be extended: "critique of logic excluded, of course", and "critique of validity of evidence excluded, of course", and so on until the dismissal of objections on the categorical ground that they are objections has been essentially neutered.

But one thing is not clear to me. Are your convictions for some sort of European ideal, one which does not yet exist anywhere but on paper or hearts and minds? Or are your convictions rather for the present EU. Which is to say the banks, the corporate interests, in your country and mine?

The Hun is always either at your throat or at your feet.
Winston Churchill

Actually, its saying that the institutions of a marriage that are the problem, and not the two spouses.

The Commission is a part of the broken institutions of the EU, like the original post-Independence Confederation of States in the US was a broken arrangement that needed to be fixed, in order for the young nation to survive.

I think the simplest reform would be to replace the national governments in the Council with senators appointed by the national parliaments, and keep the voting weights more or less what they are today. That would keep the character of the assembly of the member states, while getting rid of executive governments using the Council to make an end run around their national parliaments. It would also get the executive priviledges out of the chamber and enable a transparent voting record.

My preference would be to have one vote per senator and the senators appointed in proportion with the composition of the national parliament. Also replace the negotiated numbers of votes with a formula would be good. But those are preferences, getting the national executives out is the importnat thing.

The simplest answer would be to roll Malta into the British caucus. You could even do that without any distractions about how to average out their parliaments - for the purpose of Senate appointments, Malta would count as one seat in the English parliament.

Or we could get busy with busting open secrecy jurisdictions, and watch Malta's reason to exist as an independent political entity disappear along with their ability to make our tax monies go missing.

If we go by todays voting strenght (Nice rules), Malta would have 3 and Germany 29 (same as France, UK and Italy). That would make 345 senators compared with the 751 MEPs. Then we could also translate todays voting rules:

At least 14 (or 18, if proposal was not made by the Commission) countries,

At least 255 of the total 345 voting weights,

At least 311 mil. people represented by the states that vote in favour.

The first can be interpreted as I believe Switzerland does in federal referendums, a state votes as the majority of its voters, in this case senators. The middle one is straightforward. The third can be translated with different inhabitants/senator keys.

If we would instead go with the Penrose formula that Poland suggested and 345 senators, Malta gets 2 and Germany 33. Between that some gain a bit and some lose a bit, depending on if a state is today big or small compared with the countries it is lumped with. Poland as a small big country would lose and Romania as a big mid size country would gain. But above all the voting condition is 212 votes for, which would simplify things.

"I think the simplest reform would be to replace the national governments in the Council with senators appointed by the national parliaments, and keep the voting weights more or less what they are today."

They could be elected by national parliaments from amongst their membership, on the rule that one cannot be both a Senator and a Minister. Parties put up up to the country's number of Senators in a party list, if they have that many available members, each member of parliament casts an open alternative vote by party list, a quota of (MPs/(Senators+1))+1.

And, being aware of the famous "is/ought" dichotomy and mindful of the fact that one must take institutions, much like people, as they are, and not rather as we imagine they should be, I would have to say I honestly am resolutely anti-EU.

Anti-Euro goes without saying, much like agreeing that 2+2 <>5. It is a simple maths problem in my book; the Euro is, as Martin Wolf famously observed, probably the 2nd worst economic mistake Europe has ever undertaken. And that is just the maths and logic part of it; there is of course a practical and political application which deserves volumes on this subject as well. As many predicted, the Euro is driving Europe apart, not, as the elites expected, together; but insisting 2+2=5 never made any emperor more credible.

But most EU institutions have proven themselves to me to be unworthy of my support, and therefore I do not support them. The few that are supportable have little to no power (thinking of the parliament in particular). And those which do have power presently abuse it. Greece is simply the most egregious example, but it was the one which pushed me over.

But anti-Europist? Heaven's no. I hope we have in what replaces the EU continued free movement of people in equal measure to the free movement of capital we are willing to negotiate in future treaties (and a bit less of the latter is definitely in order). However, I do find it understandable that some conflate the EU with Europe, in much the same way people conflate Washington with America. I don't agree with the conflation, of course, as things are far more nuanced than this, but it is an understandable reflex.

The Hun is always either at your throat or at your feet.
Winston Churchill

I can only agree (and, frankly, I was expecting that answer from you).

I was precisely raising awareness for the confusion between EU and Europe.

In my head they are two separate things. But there are some that prefer very consciously to tie both.

And there are plenty that do this at an unconscious level. And because the EU is becoming unpopular, I am afraid that it will make European-cohesion very problematic precisely because of the conflation.

As many predicted, the Euro is driving Europe apart, not, as the elites expected, together; but insisting 2+2=5 never made any emperor more credible.

But most EU institutions have proven themselves to me to be unworthy of my support, and therefore I do not support them. The few that are supportable have little to no power (thinking of the parliament in particular). And those which do have power presently abuse it. Greece is simply the most egregious example, but it was the one which pushed me over.

But anti-Europist? Heaven's no. I hope we have in what replaces the EU continued free movement of people in equal measure to the free movement of capital we are willing to negotiate in future treaties (and a bit less of the latter is definitely in order).

Totally agree...

If the EU had not egged its own face so often these last years, perhaps the disparate citizenry would have seen so many advantages by now they would be (slightly more) willing to entrust it with the much vaunted fiscal union which would have rounded off the currency experiment and made it viable.

I am Europhile too, but these hack have made such a dog's dinner out of the EU I sympathise with those who hold their noses (in some cases) and vote Salvini or Le Pen.
I still think they are wrong to do so, but in Italy we have (finally) a real opposition party now polling at 23% and rising, and with whose platform I can unequivocally support - for the first time in my whole life.

I pinch myself daily to see them still making progress in a country ruined by 20 years of berlusconismo, aka untrammeled greed and an 'It's all about me and I don't give a flying rat's ass about anyone else' mentality.

An era that's finally lurching to its end!

Junker is a crook, plain and simple. The mere fact he is where he is condemns the whole EZ project as being in bad faith, and when you add in Schauble the effect is beyond chilling, psychopathological even.

Le Pen and Farage are not worth voting for, imo, but i can respect a choice to do so in the circumstances Europe is in right now as much -or more- than the Tweedle-dumb and Tweedle-dumber Sarko-Hollande or Miliband-Cameron axes Brit and French politics rotate around.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

"I hope we have in what replaces the EU continued free movement of people in equal measure to the free movement of capital we are willing to negotiate in future treaties (and a bit less of the latter is definitely in order)."

... is any more likely after dismantling the EU than it is from efforts to reform the EU.

Rather less, I would expect: when the status quo ante is "no European Union, no European Common Market, no binding European institutions", there is less leverage by people on the power of capital to dictate the outcome of the effort to renegotiate a new EU ... not more.

To summarize my view ...

Being in the EU sucks quite a bit, but then looking at countries outside of the EU, being outside the EU typically sucks quite a bit worse.

Being in the Eurozone sucks quite a bit, and looking at countries outside of the Eurozone, being outside the Eurozone quite often sucks a bit less.

So in my mind, the problems created by Eurozone membership are quite plausibly solved by Eurozone exit, the problems created by EU membership not as much. Leaving the Eurozone is getting out of the fire and into the frying pan. Leaving the EU is more likely to be out of the frying pan, into a different fire.

And to my mind, the solution to a too-weak parliament and an unrepresentative House of Review is not too dissolve both and hope for better luck next time, but rather to strengthen the parliament and to create a more representative House of Review.

obviously well thought-out comments, Bruce, I find them convincing in varying measures, the one exception noted above (shortly) still being a matter of debate rather than polemic. And, I am truly heartened to see the subsequent debate you have provoked as well, among equally thoughtful and well-informed people.

Thanks again.

The Hun is always either at your throat or at your feet.
Winston Churchill

Being in the Eurozone sucks quite a bit, and looking at countries outside of the Eurozone, being outside the Eurozone quite often sucks a bit less.

So in my mind, the problems created by Eurozone membership are quite plausibly solved by Eurozone exit, the problems created by EU membership not as much. Leaving the Eurozone is getting out of the fire and into the frying pan. Leaving the EU is more likely to be out of the frying pan, into a different fire.

Here I am not sure that I agree. Setting aside the worthy in my view argument along the lines of "EU reform is better/more politically realistic/reasonable than re-foundation" which you eloquently make here and elsewhere in this thread, I would say that being in or out of the EU is not such a positive/negative dichotomy. Obviously in my view there are geographical limitations to this argument; Canada for instance would not be served well by the EU for reasons which go beyond OCA (ah, Maastricht) which we so often write about. There are other obvious and fundamental blocks, the other parts of article three beyond the Euro not being necessarily amenable (free movement of people in particular) to Canadian interests. Articles 4 and 5 are likely equally not acceptable, say, to Canada, and then there are the articles in the TFEU which can really be sticking points, the easiest ones to point out for me being the CFP and the CAP for a Canada (and others). And what I am saying for Canada would go, in spades, for Russia.

And even the smaller non-member states in EFTA now but not in the EU (thinking first of Iceland which just withdrew its candidature to much fanfare there) are surely well served in their existing agreement with Brussels, which covers, according to an Icelandic lawyer close friend of mine, 80-90% of the EU legislation (but not, pointedly for Iceland, the CFP). And, in fact, EFTA membership is actually a common argument for sovereigntists in the UK: if Efta works so well for Switzerland, why not we?

Now, as for reform rather than re-foundation (and the subsidiary discussion of whether EU demise will lead to no ultimate replacement but rather status quo ante and shudder the thought of going there again); I am certainly not a stranger to this discussion and argument, and the party I was formerly a member (left it rather emphatically last year) is wont to argue the same: "yes, Europe, but a better, more social Europe," an argument, alas, which loses its luster as the electorate comes to the growing realisation that, given current institutions, such a wish is rather a pipe-dream than a project.

When evaluating this argument therefore, I think we need to be mindful of the actual existing EU, and emphasise this, rather than the one we should like to have. And here, my first instinct would be to point out just how central to the actual-existing EU the Euro is; and also, just how politically difficult (I would argue impossible without a big bang, and I am not sure a grexit is such a big bang, this too is, at least for now, debatable), within the actually-existing EU, it would be to dismantle Maastricht. A whole encyclopedia of diaries could be written on how that would have to happen; I won't do that, simply say I come down on the side of those who say "impossible" without a big bang, for the simple reason that actual-existing major financial interests in the core Eurozone member states need for the Euro to continue to exist or their balance sheets may be in some cases irreparably harmed (which, as a citizen, I need point out, all the while being equally mindful of the fact that those interests are not necessarily mine nor indeed most other fellow citizens).

Now, the existence of the Euro as a central EU institution is a given. We can say "yes, but Denmark and the UK negotiated exception and Sweden and others haven't entered ERM2 or done the proper establishing legislation and they seem to be members in good standing all the same" but this merely sidesteps the treaty requirement that new entrants, via accession treaty, must need adopt the euro or make movements thereto, normally posthaste as we see now in the Croatian case. And here is the problem with this argument: it isn't just that developed countries with functioning currencies of their own are in general better off out (and take the case of Iceland: look at the size of that economy and monetary base, and the fact they still can manage at that scale, and the challenges they faced but were up to 7 years ago). It is also that those countries for whom the Euro might actually provide some benefits which mitigate the undeniable drawbacks, as in the places where debts are denominated in Euros anyway like the Baltics or parts of the former Jugoslavia, tend to be countries whose integration is likely to put further pressure on working people via the free movement articles.

So, the club to join does not include places like Switzerland or Norway, where today's Pole or Romanian and tomorrows Albanian or Macedonian plumber might find lucrative work. No, today's club to join includes the countries which currently are not capable of giving Albanian and Macedonian plumbers enough opportunity to make a living and raise a family today. And given the state of the mismanaged EU economy (and this, too, is virtually treaty-bound given actual-existing political facts on the ground....you may argue they can change, but this is a very very hard argument to make) allowing ever more free movement simply translates into more precarity, and lower wages, for working men and women in today's EU, as any former Labour voter who just cast a ballot for UKIP last week (and there were many, UKIPs score was still pretty good, even though their Tory supporters went back to Blue come election time, their Labour supporters tended to stick, and who can blame them given Labour's political statements and programme?)

Coming back to the discussion of the Euro, central as it is to the institution which is the EU, what then to do? If the existing political order is unwilling to revisit this very damaging yet fundamental part of the Union, what can be done about it? And, related, will blowing up Maastricht destroy the EU?

To the latter question, I am unconvinced; the treaties which founded and gave form to the EU, and there are a long series of them, may well be put in question if and when a major EU member state abrogates the Maastricht treaty, but it would take a common political will to actually "disestablish" the other existing treaties which would continue to be in force at the very least for all other member states and, I would argue, ultimately also for the member state who undertook to negotiate out of the Maastricht treaty. Of course this is arguable, but my thought is in this sense.

And to the former question, that of "what can be done," I have long argued that I live in and am a citizen of a country which is a critical part of the Euro architecture, France. And, here in France, there is a party (unfortunately only one, with a reprehensible past, with debatable though well-sounding policy positions even when the policy diagnoses are in my view often correct, and with some still rather unpalatable policies all the same (one can't have it all with any party of course) with a platform and public statements by its leaders to negotiate in an orderly way (but disorderly if necessary) France's way out of Maastricht. Say what you will about the FN, and I do, but on this subject, they are very clear and credible. And on this, and only this subject and with the caveat that I would very much like for a left party which has a chance at power to make the same case and commit to the same programme but Jacques Sapir's movement is not a party, we have a chance at that big bang.

Now realising that I have written a diary and not a post. Perhaps I shall later convert it, time permitting.

The Hun is always either at your throat or at your feet.
Winston Churchill

Spokesperson for EU Foreign Affairs and Security Policy, Maja Kocijančič, has said in no uncertain terms that while the EU has received Foreign Minister Gunnar Bragi Sveinsson's letter in which he announces the end of Iceland's EU application, it is not recognised as an official withdrawal.

"We have been saying for the last two years that obviously it's the prerogative of Iceland to decide - in a free and sovereign decision - how they want to pursue their relationship with the European Union," Kocijančič told Vísir in an interview yesterday. "But in our view, the letter in itself does not amount to the withdrawal of the membership application."

The Minister points out that European Commission President Jean-Claude Juncker told reporters last July that "there will be no new enlargement in the next five years. The EU needs to mark a pause in its enlargement process so that we can consolidate what has been done with 28."

In light of this, the Minister told reporters, "people are wondering whether it's even necessary to submit such a proposal [as ending accession], whether it's clearly finished as far as the EU is concerned."

As reported, the ruling coalition announced last February their intentions to end EU accession talks, which were put on hold shortly before parliamentary elections in April 2013.

The announcement sparked protests in the thousands, as well as a petition calling upon the coalition to keep their campaign promise of submitting the EU question to national referendum.

"Obviously in my view there are geographical limitations to this argument; Canada for instance would not be served well by the EU for reasons which go beyond OCA (ah, Maastricht) which we so often write about."
Yes, because Canada is not in Europe. The European Union as a project to cope with the problem of coexistence in Peninsular West Asia without periodically fighting bloody wars or, in this coming century, collectively committing suicide as industrial societies because of an inability to agree on ceasing and desisting from committing said suicide ... is a project for Europeans.

"And even the smaller non-member states in EFTA now but not in the EU (thinking first of Iceland which just withdrew its candidature to much fanfare there) are surely well served in their existing agreement with Brussels, which covers, according to an Icelandic lawyer close friend of mine, 80-90% of the EU legislation (but not, pointedly for Iceland, the CFP). And, in fact, EFTA membership is actually a common argument for sovereigntists in the UK: if Efta works so well for Switzerland, why not we?"

Except there is a fallacy of composition issue ... if everyone leaves the EU in order to join EFTA in order to gain a common market and accepts as a cost alignment with 80%-90% of EU legislation ...
... there is no longer an EU to come up with legislation nor the EU kernel which anchors EFTA and ensures that it functions as a stable free trade zone around the EU.

The "euroskeptic" as in countries are better off leaving the EU cannot be on the basis that each country is individually better off leaving the EU if each other country remains in ... it has to be that the entire project is better off abandoned.

"A big bang is needed in order to save the project" is certainly an arguable position, but its different to "everyone is better off if everyone leaves", which is what is implied by:

But anti-Europist? Heaven's no. I hope we have in what replaces the EU continued free movement of people in equal measure to the free movement of capital we are willing to negotiate in future treaties (and a bit less of the latter is definitely in order).

... since without exit from the EU and creation of the replacement, it is not "replacement of the EU", but rather "reform of the EU".

I agree that #Grexit might not be the "big bang" required, but since the sharks will surely circle for other prey if Greece escapes to live another day, it could lay the foundation for the "big bang" required.

As to whether any nation should join the EU with joining the Eurozone a condition for joining, certainly not. And for those nations, joining EFTA is a quite reasonable alternative.

But for incumbent members of the EU, an exit from the Eurozone and refusal to consider returning until the broken system is rebuilt in some way whole is striking at the weakest link in the Maastricht system.

But the EU is not identical to Maastricht ... as noted:

the treaties which founded and gave form to the EU, and there are a long series of them, may well be put in question if and when a major EU member state abrogates the Maastricht treaty, but it would take a common political will to actually "disestablish" the other existing treaties which would continue to be in force at the very least for all other member states and, I would argue, ultimately also for the member state who undertook to negotiate out of the Maastricht treaty. Of course this is arguable, but my thought is in this sense.

... having taken the form of being built upon the "three pillars", and then later subsuming the "three pillars", and with Amsterdam including some of the "citizenry of the EU" measures omitted from Maastricht in the interest of serving the "banks of the EU", the EU is not just Maastricht, as an appendix stapled onto the preceding institutions, it was at the outset largely made up of the preceding institutions, and has since had more folded into it.

Now, I aint no damn lawyer, and for all I know the pretext for exit from the Eurozone might be different for each country departing. It would, for instance, surely be surprising if there was no part of Greek's application that was fraudulent, and the Government of Greece could discover that fact, regarding their predecessor's application to join the ERM, and present as a fait accompli that Greece not having legitimately applied to join, the Government had no choice but to consider the membership null and void, and from the moment they discovered this awful fact, had begun acting on that basis.

And perhaps then immediately launch a referendum on whether Greece should remain out, or should re-apply to join the ERM.

"Oh, no, we are committed to meeting our Maastricht treaty obligations (and it turns out it will be straightforward, given the structure we have set up for our central bank), but unfortunately our predecessors misled you, and the application is null and void, so our membership in ERM was fictitious, and without two years valid membership in ERM we regretfully cannot continue participating in a monetary union, the multitude of benefits of which which we are not entitled to enjoy."

Indeed it is not. But I chose to talk about Canada first to make a quite black and white point about geography so as to facilitate the real object - Russia. What can we say about Russia, set against this very same backdrop?

Adding, more as a curiosity than anything else, that the vast majority of Icelanders, technically and geologically speaking, are also not in Europe, but rather, North America.

The Hun is always either at your throat or at your feet.
Winston Churchill

"Adding, more as a curiosity than anything else, that the vast majority of Icelanders, technically and geologically speaking, are also not in Europe, but rather, North America."

Yes, but its an island, and whichever fraction of Iceland is on North American and European continental plates, an island that closer to continental Europe than mainland North American, and a nation with closer cultural and historical ties to other Nordic countries than to either Canada or the US.

Given its population and location, there's nothing unreasonable in Iceland remaining in its EFTA relationship to the EU. But then, outlying islands are by their nature special cases. If, all of Italy, Spain, Portugal, France, the UK and Eire left the EU, which is the kind of thing one is talking about if one it talking about leaving the EU being a good idea "in general", abrogating the layered pile of treaties that is implied by an "EU exit", then its no longer a question of special cases.

It should be a great relief to all, especially Greeks, to learn that the Eurozone is an `area of solidarity and prosperity'. The news that the dystopia of `markets and speculators' is confined to the Anglo Saxon world is a further comfort.

Most importantly if the Great Experiment ends in tears there will be no need for an inquest. It was the Anglo Saxons!

Anyone remember Harold Wilson and the Gnomes of Zurich?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

Gosh, something must have been lost in the translation. I'm sure that the original meaning should have been (added in []):

It should be a great relief to all, especially Greeks, to learn that the Eurozone is an `area of solidarity and prosperity [for banks]'. The news that the dystopia of `markets and speculators [taking income that rightfully belongs to banks]' is confined to the Anglo Saxon world is a further comfort.